Nasdaq rethinks Amazon cloud partnership

April 7, 2014 Leave a comment

March 23, 2014 5:36 pm

Nasdaq rethinks FinQloud partnership with Amazon

By Arash Massoudi in New York and Barney Jopson in Washington

Nasdaq is re-evaluating a venture based on Amazon’s cloud computing services after a landmark partnership to offer back-office data storage to banks and brokers failed to gain traction with customers.

The exchange operator is now restructuring the service, known as FinQloud, following the departure of top executives and others associated with the project, people familiar with Nasdaq’s thinking said.

The options for FinQloud now include a sale, shutting it down entirely or – most likely – a renegotiation of the agreement with Amazon. That could see Nasdaq extend its current arrangement or invest further in the unit, one person close to the company said.

Nasdaq said in a statement: “We are always looking at growth opportunities with Amazon Web Services and ways to continue to leverage our cloud technology offering for the financial services industry.”

Any scaling back of the partnership would represent a blow to both companies. FinQloud enables banks and brokers to use Amazon’s servers to store the sensitive data that regulators require them to keep, at a lower cost than building and maintaining their own data storage facilities.

Amazon unveiled the Nasdaq partnership with much fanfare in September 2012 as it sought to market cloud computing services to financial services companies and other businesses.

The online retailer wants to turn its cloud computing business, Amazon Web Services, into an important revenue stream and a pillar of its service business.

At the time of the launch, Andy Jassy, the head of AWS and a close ally of Amazon founder Jeff Bezos, said it was “a possibility” that real-time stock trading could eventually take place in Amazon’s cloud.

Amazon declined to comment on FinQloud, but said AWS had other financial services clients including S&P Capital IQ, Tradeworx, a US financial technology company, Bankinter of Spain, and National Australia Bank. Clients in other industries include Netflix, News Corp, Unilever and LinkedIn.

Nasdaq is seeking to expand its services to generate revenues beyond its core business, but some former employees have questioned its ability to offer customised services.

“The brokerage services unit wants to provide services to customers but really struggles to get outside the exchange mindset”, said one former Nasdaq insider.

The setback for Nasdaq comes as it prepares for an investor day this week where Robert Greifeld, its long-time chief executive, is likely to face questions over a recent investigation launched by Eric Schneiderman, the New York attorney-general, into the relationship between high-frequency trading firms and stock exchanges.

Key executives have also left the group. Eric Noll, Nasdaq’s former executive vice-president for transaction services, quit unexpectedly last November to become the chief executive of struggling brokerage ConvergEx.

 

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Kee Koon Boon (“KB”) is the co-founder and director of HERO Investment Management which provides specialized fund management and investment advisory services to the ARCHEA Asia HERO Innovators Fund (www.heroinnovator.com), the only Asian SMID-cap tech-focused fund in the industry. KB is an internationally featured investor rooted in the principles of value investing for over a decade as a fund manager and analyst in the Asian capital markets who started his career at a boutique hedge fund in Singapore where he was with the firm since 2002 and was also part of the core investment committee in significantly outperforming the index in the 10-year-plus-old flagship Asian fund. He was also the portfolio manager for Asia-Pacific equities at Korea’s largest mutual fund company. Prior to setting up the H.E.R.O. Innovators Fund, KB was the Chief Investment Officer & CEO of a Singapore Registered Fund Management Company (RFMC) where he is responsible for listed Asian equity investments. KB had taught accounting at the Singapore Management University (SMU) as a faculty member and also pioneered the 15-week course on Accounting Fraud in Asia as an official module at SMU. KB remains grateful and honored to be invited by Singapore’s financial regulator Monetary Authority of Singapore (MAS) to present to their top management team about implementing a world’s first fact-based forward-looking fraud detection framework to bring about benefits for the capital markets in Singapore and for the public and investment community. KB also served the community in sharing his insights in writing articles about value investing and corporate governance in the media that include Business Times, Straits Times, Jakarta Post, Manual of Ideas, Investopedia, TedXWallStreet. He had also presented in top investment, banking and finance conferences in America, Italy, Sydney, Cape Town, HK, China. He has trained CEOs, entrepreneurs, CFOs, management executives in business strategy & business model innovation in Singapore, HK and China.

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